What are estimated taxes and how do I file them?

With the start of the school year the majority of the questions I receive are regarding this topic, "What are estimated taxes and how do I file them?".  Basically, estimated taxes are required to be paid by individuals who do not have taxes withheld from their wages.  For stipends and grants, taxes are typically not withheld, in which case you are expected to make estimated federal and state tax payments.  Estimates are payment installments that need to be submitted to the IRS and your state taxing authority.  For the IRS and the majority of states, the filing dates for 2009 are as follows:

1st Installment    April 15, 2009
2nd Installment   June 15, 2009
3rd Installment   September 15, 2009
4th Installment    January 15, 2010

Fortunately the government is nice enough to give you options, you can either pay in four equal installments, or you can one large prepayment for your 2009 taxes by April 15, 2009.  I don't recommend the later for two reasons, (1) time value of money lesson #1 - a dollar is worth more today than it is tomorrow and (2) its October. All-in-all, if you haven't paid your estimates yet, you should.

Here is the link to the IRS Form 1040-ES for payment of estimated taxes:  http://www.irs.gov/pub/irs-pdf/f1040es.pdf.  This link includes instructions for filing, including e-filing and online payments.

Don't forget that you are also required to file state estimated tax payments.  I recommend viewing your state taxing authorities website for appropriate forms and due dates.  For Californians, the following link with provide you with information regarding Form 540-ES: http://www.ftb.ca.gov/forms/2009/index.shtml.  California requires estimated to be filed according to the same time frame as the federal estimated tax payments (see dates above).

If you need help filing or have questions, comments or concerns please email me at lindsaybeckstead@gmail.com. 


Please note that federal tax regulations (Circular 230) impose certain requirements on written tax advice, including e-mails. This post (including any attachments and enclosures) is not intended to be a "reliance opinion" within the meaning of Circular 230. Accordingly, this post and any tax advice given herein is not intended or written to be used, and cannot be used, as a "reliance opinion" for the purpose of avoiding tax penalties that may be imposed under applicable tax laws.